According to five individuals, British banks have informed the government that a plan to prohibit all Russians from retaining more than 50,000 pounds ($65,430) in their accounts is illegal and impossible.
When Russia invaded Ukraine, the government said that “all Russians” would be barred from making substantial deposits in UK banks, with Prime Minister Boris Johnson claiming that it was part of a campaign to isolate Moscow.
According to government estimates, there are currently more than 70,000 Russian-born nationals living in the United Kingdom, and London has long been one of the top destinations for Russian money in Europe, with many wealthy families moving in the capital.
According to banking sector sources, the British plans on Russian deposits would violate equality laws, which prohibit discrimination based on nationality, in the latest challenge to rolling out penalties against Moscow. more info
“What they’re proposing is illegal, there’s no doubt about it,” said one bank executive who has discussed the ideas with the authorities. “This appears to be a hastily made declaration with no thinking given to the repercussions.”
A spokeswoman for the British government declined to comment.
Britain is imposing the largest-ever array of penalties against Russia, including asset freezes and travel bans on hundreds of individuals and entities accused of assisting President Vladimir Putin.
However, some of those measures, like as the blanket ban on affluent Russian depositors, are still in the works, raising doubts about the effectiveness of the UK’s efforts to put pressure on Moscow and reduce ties with Russia, which have inspired some to dub its capital “Londongrad.”
The bank deposit scheme is the sole action that applies to all Russians in the UK, not just those who have been specifically sanctioned.
According to the financial sources, they have requested for assurances that they will not be sued if they enforce the limitations, which are viewed as one of the most far-reaching measures imposed since Russia’s Feb. 24 invasion.
Such assurances, however, may not be achievable without a change in the legislation, and more than a month after the caps were proposed, no statements have been made about how they will work, including whether dual nationals would be affected or how numerous deposits across several institutions would be handled.
‘NOT WELCOME ANYMORE’
While the government has promised to crack down on illegitimate Russian riches, an increasing number of Russians who have not been sanctioned are anxious that they, too, may be caught up in the net.
One Russian national who has worked in London for 16 years and is not subject to sanctions said he would consider leaving if the plans were carried out.
“If this happens, it sends a very clear message that we are no longer welcome,” he stated on the condition of anonymity.
European Union regulators have also directed some of the bloc’s banks to scrutinise all Russian and Belarussian clients, including EU residents, to ensure that they are not being used to bypass Western sanctions.
Russia claims to have initiated a “special military operation” to disarm Ukraine, while Western countries claim that Moscow’s goal is to destabilise the Ukrainian government as soon as possible.
One of the financial sources, who did not want to be identified, said conversations were underway, but government officials had yet to disclose any information on how the prohibitions would be implemented.
He expressed concern that the limits would place his bank in violation of legislation such as the Human Rights Act, which might lead to lawsuits and compensation claims.
Bankers have stated that they are eager to assist in the prosecution of Putin-friendly oligarchs, but that the government must first identify those individuals.
According to all of the bank insiders who talked to Reuters, the idea would necessitate considerable upgrades to technology and account creation processes, and it may be too complicated to accomplish.
Although users are required to identify their residency when creating an account, this does not normally entail submitting information about their nationality, according to one source.
This means that banks would have to ask all customers with more over 50,000 pounds to provide details about their nationality in order to identify Russian customers.
“We are definitely eager to collaborate with the authorities to target Putin-aligned oligarchs,” the insider stated. “However, we have worries about how successful this would be in addressing such actors while also harming the interests of innocent people.”
